This article was produced in partnership with Intact Insurance
Bethan Moorcraft, of Insurance Business, sat down with Chris Reid, VP of digital distribution at Intact Insurance, William Chan, president of BrokerTeam Insurance Solutions, and Sylvester Slowakiewicz, director of personal lines at Billyard Insurance Group, to discuss how UBI enables personalized customer journeys.
The COVID-19 pandemic had a huge impact on Canadian driving habits. At the height of the pandemic lockdowns, the amount of traffic on the roads, the number of kilometres driven, and the frequency of collisions all declined significantly. Now that society has re-opened and traffic congestion has returned to pre-pandemic norms, more Canadians are considering usage-based insurance (UBI) as a solution that more accurately reflects their unique driving behaviour.
UBI launched in the Canadian auto insurance market in 2013 as an alternative to insurers’ more traditional methods of assessing auto insurance premiums. Instead of focusing on static data like age, gender, postal code, and driving history, UBI uses telematics technology (often via smart phones) to assess driving behaviour. It captures data such as how hard a driver brakes, how fast they accelerate, how they take corners, and how often and how far they drive – and then calculates a unique premium (including any discounts or penalties) based on that data.
“When we think about the fundamentals of insurance, the aim is to provide the most comprehensive coverage at the best price to the customer,” said Chris Reid (pictured), VP of digital distribution at Intact Insurance. “But one of the challenges we faced as an industry was that we were relying on limited or static historical data – such as driving experience, past claims, and where a driver lives – to price auto insurance.”
“While that strategy worked well, everything changed over a decade ago with the advent of the smart phone. This completely changed the way we can design and deliver a product experience because we can capture large volumes of real-time data to better price auto insurance products, predict potential outcomes or issues, deliver our services, and take a supporting role with customers to improve their risk management and their driving behaviour.”
Intact Insurance was one of the first property and casualty (P&C) insurers in Canada to launch a UBI product back in 2014. The early adopters were tech-savvy individuals with smart phones, as well as drivers who could benefit from more personalized pricing if they felt their unique driving behaviour could mitigate high premiums. Over the years, Intact Insurance has seen steady growth in adoption of UBI across its entire auto insurance portfolio, in provinces with private auto insurance, with a notable surge of interest during the COVID-19 pandemic.
“Consumer adoption of digital channels has really accelerated during the pandemic, and the expectations upon service providers have changed dramatically,” said Reid. “It all comes down to wanting more communication, more personalization, and a more continuous and connected experience. UBI gives us the ability to check all of those boxes. It’s an active insurance product that gives customers personalized recommendations, advice and guidance, as well as additional value-added services.”
UBI is a boon for brokers
UBI solutions have garnered significant favour among Canadian insurance brokers. William Chan, president of Ontario-based BrokerTeam Insurance Solutions, said UBI helps brokers to “be competitive with new business opportunities” and attract conscientious drivers who are interested in improving their driving habits as customers. He also said it helps to improve the retention rate of customers who have grown to appreciate UBI and its many benefits.
The technology is helping insurance brokers to remain relevant with clients who expect a highly personalized, flexible, and engaging digital experience, according to Sylvester Slowakiewicz, director of personal lines at Billyard Insurance Group. He described UBI as “a perfect medium” that enables brokers to provide personalized customer journeys.
“UBI further diminishes the transactional portion of the customer journey by promoting dialogue, collaboration, and mutual trust,” Slowakiewicz told Insurance Business. “I can finally expand my conversations beyond discussing traditional rating variables affecting the insurance cost, by placing my clients in the driver’s seat of their own premium rating experience.”
“The beauty of UBI is that it provides the user with a continued experience throughout the entire policy lifespan,” Slowakiewicz added. “From a client’s perspective, there is always something to look forward to, something to learn, something to improve, and finally, something to achieve while being in a full control of the process. Most aspects of insurance transactions are in the sole control of brokers and insurers. With UBI products some of that control is now shared with policy holders, further enhancing the overall personalization of the customer journey and shared ownership of the final outcome.”
UBI and the COVID-19 pandemic
Reid described UBI as “the single best tool” that insurers had to respond to individuals’ unique driving situations during the pandemic. He explained that UBI was able to respond straightaway to changes in driving behaviour, and UBI customers benefitted from rate adjustments far sooner than the industry was able to provide blanket relief to standard auto insurance customers in the form of premium rebates.
“More than two-years since the pandemic truly set in Canada has been enough time to alter our driving habits,” Slowakiewicz (pictured below) commented. “With the significantly reduced numbers of commuters on the road, we’ve found ourselves speeding through wide open roads even during traditionally busy morning and evening commute times. With traffic congestion steadily increasing we all must now pay extra attention to our driving habits and do our best to improve on those less than perfect driving behaviours … speeding being one of them!
“This is where the value proposition of UBI becomes so compelling for drivers and brokers alike. With UBI programs tracking behaviours such as speeding, hard breaking, aggressive acceleration it is no longer a case of utilizing a discount alone but improving driving behaviours that could potentially have life changing implication for drivers and those around them.”
Chan emphasized the importance of UBI now that more vehicles are back on the road and some drivers are in need of a safety refresher. He told Insurance Business: “Our carrier partners have been informing us that both the frequency as well as severity of auto claims have been going up, and this can have an upward impact on auto insurance premiums. I think this is a great opportunity for brokers to offer UBI to our clients. On the one hand, UBI rewards premium reduction to those who already have good driving habits. On the other, UBI provides guidance to other drivers who are willing to improve. It’s a win-win proposition.”
Incentivizing uptake in UBI
Canada already has one of the highest levels of UBI adoption worldwide, and the uptake has accelerated post-pandemic. Reid said that close to a majority of Intact Insurance’s new auto insurance business comes with UBI enabled, which he described as “a key success factor” for the insurer.
“I think the Canadian market is really receptive to UBI. Consumers, customers, and brokers have certainly shown us that,” he said. “Everyone wants to pay the premium that they're responsible for, or that reflects their individual risk profile, and this is the best tool as an industry we've got to do that, to promote that equity, to promote that access and affordability. That’s why we're so passionate about pushing this product out and getting brokers and customers to adopt it as best they can.”
For brokers, both Slowakiewicz and Chan believe its important to have genuine conversations with clients and to promote UBI for its many benefits, not just focusing on discount alone. They both want to see the UBI products in the Canadian marketplace expand to incorporate more value-added features.
“Over time I think more features can be added to provide more benefits to the user, such as real-time feedback and providing useful data in an easy-to-digest manner,” said Chan. “Is there a way to make driving safely more fun and engaging? That in itself is its own reward. For instance, members of a household can compete to see who can achieve the higher score in safety on a weekly basis? I think there is so much that can be done to further improve and in turn incentivize drivers to embrace this already great technology.”
Meanwhile, Slowakiewicz is calling on insurers to “relentlessly pursue innovative ways to expand the features of UBI beyond providing feedback on driving habits alone”. He added: “From a customer point of view, the added-value features must focus on addressing every aspect of a driver’s ecosystem without sacrificing its collaborative nature for the end-user.”
Recognizing the desire for more innovation from both customers and brokers, Intact Insurance recently launched the fourth iteration of its UBI product, my Drive, in Ontario, with a focus on delivering more value for drivers and customers than just premium savings. The new release includes weather alerts, manufacturers’ recall notifications and real-time accident support. It also allows customers to submit and track claims from their smartphone.
“That's really the next frontier for UBI, and the next orientation that we're really investing a lot of our energy behind,” said Reid. “How do we ultimately build a deeper connection for brokers’ customers, where they can see the benefit of UBI beyond just the price or the premium?”